THE USUAL approach to adjusting lifestyle (and the costs that go with it) in the face of declining financial prospects in a pandemic is sometimes described as “tightening your belt.” This metaphor of moving one hole or two inward an accessory that holds up your pants gives an inaccurate imagery. Presumably, this move on the demand side is due to some weight loss associated with, in this case, having less to eat from not too much dining out. (Give up the cheese platter.) With the reduction of income, the lifestyle one can afford needs to be notched down as well.

How tight is your belt?

As in all things monetary, lifestyle choices on how to enjoy life (and what’s left of it) can be defined in terms of supply and demand. A certain status and way of living (and spending) have a cost. So, on one side (demand), you can ask — what lifestyle can I buy with my present income? Taking the supply side of this equation is different — what are the options available to me? The two questions are related, but not identical.

The supply side of the lifestyle issue is about available options. Rags-to-riches stories abound with this supply side dynamic as a goad to success. The poor waif, in a case of unmitigated envy, looks at the lifestyle of the truly rich and then works hard to get this through boxing wins or sudden celebrity status, or both. (Can a tour of the new house on YouTube be far behind?)

The disadvantaged child dreams (biographers never use the word “envy”) of a life with a luxury car and a mansion with a pool in LA. If the dreamer is aggressive or corrupt enough, he throws in a yacht just to differentiate his lifestyle from others who are merely dependent on honest toil.

Lifestyle costs fall in the realm of what economists call “discretionary spending” which has more to do with status issues than bare necessities. These involve unnecessary or avoidable expenses which can be postponed until the market recovers sufficiently to realize gains.

Here’s an example of a lifestyle costing approach.

First, add up the monthly basic costs like groceries, utilities and other necessary and recurring items. (Okay, you can include cable TV and Wi-Fi.) This cost is matched with current revenue which should then yield a positive balance for discretionary expenses. If there is no balance left after the necessities, then you can forget the extra amenities of life until the next planning cycle. A deficit in this department means going back to tightening of the belt and skipping meals (see above).

On the demand side of this approach, the disposable income after the necessities translates into availability for discretionary spending. The balance after deducting obligatory costs from revenue determines the cash for the year’s lifestyle expenses like (domestic) travel, spa treatments from masked attendants, or a new car.

The more aggressive supply side approach starts with the “wish list” of options (one trip to Scotland, after the vaccine; a new golf set; a patio for the house) and then works backward to the revenue needed to achieve material Nirvana. It is then a matter of applying a reality check on improbable sources of funds, like a maiden aunt finally kicking the bucket and leaving an uncontested will; or a rise in the stock market index — in spite of the gloomy GDP (gross domestic product) prospects.

Costing out a lifestyle gives an idea of where your cash and credit card charges are going. Sometimes, you are not aware how much a lifestyle costs until you break down the details. This is a way of putting a number on the cost of keeping up with peers. It’s much simpler to switch to a more frugal herd.

It is best to think of children’s contribution to the lifestyle of aging parents as limited to occasional treats like cash gifts on birthdays and anniversaries or a sponsored trip overseas, after the pandemic.

Even in our old-fashioned Asian society where children seem obliged to take care of their aging (and no longer productive) parents, “filial piety” has its own strings. The children feel entitled to instruct parents on the proper lifestyle — just don’t go to the malls. And shop online.

A little discomfort, such as a tightened belt, is part of coping with uncertainty… and keeping the pants up.


Tony Samson is Chairman and CEO, TOUCH xda